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Sunday, August 18, 2013

Does the Designs Act Provide for a Counter-claim for Cancellation of a Registered Design?

A few days ago I was asked if the
reference to “defence” of invalidity of a design under Section 22(3) and (4) of
the Designs Act, 2000 may be construed as a reference to a counter-claim for
cancellation of a design in response to a suit for infringement of the design.

Section 22(3) of the Designs Act
states that the grounds for cancellation of a design enumerated in Section 19
of the Act may be raised as defences in a suit for design infringement. In my
opinion, Section 22(3) provides for only a “defence” of invalidity, but not a “counter-claim”
seeking invalidation of the registered design.

This is because unlike Section 64
of the Patents Act which speaks of both a counterclaim to a suit and a
stand-alone petition before the IPAB to revoke a patent, Section 19 of the
Designs Act restricts itself to a petition for cancellation of the design
before the Controller of designs, but does not provide for a counterclaim.

The framework of the Designs Act,
in a way, is similar to the Trademarks Act wherein there is no provision for
rectification of a trademark by the Court. Therefore, although it is possible
for the defendant in a suit for design infringement to raise the defence of
invalidity of the design as part of his written statement, it is not in the
nature of a counter-claim. At best, the defence could have the effect of
preventing the grant of an injunction, interim or permanent, if the Court comes
to the conclusion that the validity of the design is under serious fire. However,
the Court does not have the power to revoke/cancel the registered design.

The option of defence of design
invalidity provided for under Section 22(3) of the Act is akin to Section 107
of the Patents Act which allows a defendant to raise the defence of patent
invalidity by relying on grounds provided for under Section 64 of the Patents
Act. In a patent infringement suit too, if only defences under Section 107 are
raised and no counterclaim under Section 64 is instituted, the High Court
cannot invalidate/revoke the patent.

“In other words, if the counterclaim of
revocation is no more treated as a counterclaim, the suit must be adjudicated
by a forum which has the power to do so under Section 104 of the Act, namely
the District Court.

To my surprise, there is a short
order on this issue that was delivered by the Allahabad High Court inFabcon Corporation v. Industrial
Engineering Corporation(AIR
1987 All 338). In this case, the Plaintiff claimed that since a defence of
invalidity of the patent under Section 107 (1) was taken by the Defendant, such
a defence must be deemed as a counterclaim under Section 64 of the Act. This
meant that the suit for infringement had to be transferred along with the
deemed counterclaim to the High Court.

The High Court disagreed with the
Plaintiff and took a view, which I fully agree with and have always believed
in, that a defence as envisaged under Section 107(1) is not the same as filing
a counterclaim of revocation under Section 64 of the Act.”

To me, the mechanism under the
Designs Act is a curious mix of options provided in the Patents Act and the
Trademarks Act. The Designs Act too envisages transfer of the suit to a High
Court when an invalidity defence is raised, which is similar to the Proviso to
Section 104 of the Patents Act, with the exception being that the Proviso in
the Patents Act mentions the suit, “along with the counter-claim”. The absence
of a counter-claim seeking cancellation of the design is similar to the
Trademarks Act. And yet, there is no provision for stay of the suit for design
infringement during the pendency of the cancellation petition, unlike Section
124 of the Trademarks Act.

What complicates the
straight-forward conclusion that the Designs Act does not provide for a
counter-claim is Section 23 of the Designs Act. This provision makes Sections
106 (suit for groundless threats of infringement) and 113 (issuance of
certificate of validity of a patent) of the Patents Act applicable to Designs
Act with incidental changes. Extracted below is Section 113 of the Patents Act:

“(1) If in any proceedings before the Appellate Board or a
High Court for the revocation of a patent under section 64 and
section 104, as the case may be, the validity of any claim of a specification
is contested and that claim is found by the Appellate Board or the High Court
to be valid, the Appellate Board or the High Court may certify that the
validity of that claim was contested in those proceedings and was upheld.”

If this provision is to be
applied with incidental changes to the Designs Act, how would it read? One
possible reading could be as follows:

“(1) If in any proceedings before the Controller or the High
Court for the cancellation of a design under section 19(1) and
section 19(2), as the case may be, the validity of any registered design is contested and that design is found by the Controller
or the High Court to be valid, the Controller or the High Court may certify
that the validity of that design was contested in those proceedings and was
upheld.”

Another possible reading could be
as follows:

“(1) If in any proceedings before the Controller or the High
Court for the cancellation of a design under section 19(1) and
section 22(3), as the case may be, the validity of any registered design is contested and that design is found by the Controller
or the High Court to be valid, the Controller or the High Court may certify
that the validity of that design was contested in those proceedings and was
upheld.”

The second possibility gives the
impression that Section 22(3) provides for a counterclaim to revoke the design.
However, it could again be argued that when a defence of design invalidity is
raised, the Court has the power to declare and uphold the validity of the
design, but does not have the power to invalidate the design since the Designs
Act does not provide for a counterclaim.